China Research

Abstract

Economists – particularly foreign financial analysts, also in Europe – focus mainly on the Purchasing Manager Indices (PMIs) and quarterly GDP changes when analyzing Chinese growth. This is understandable since these data are easily available. More recently these data did not produce an optimistic picture for China’s economy. But does this information really provide reliable information on China’s growth performance and outlook? Does this analytical approach capture the strategy and policy changes announced during the Third Plenum in November 2013?

Certainly not. Consequently, foreign and even domestic investors run the risk that portfolio and particularly more long-term investments are too heavily based on short-term indicators that do not reflect ongoing structural improvement measures or policy changes.

The paper will summarize past and current discussion on Chinese GDP data and deal with the alternatives for assessing economic growth and its quality. Merely relying on an improved and widened analysis of Chinese reform policy since November 2013 is difficult and has its limits. But better analysis can be created by economists themselves even under current conditions. Transparency is still by far too poor. Improvements should not be that difficult to achieve all the same. Some ideas are given in this paper – and also hints how and where to find information on structural improvements that have taken place or are planned concretely for the nearer future.

Better insight into Chinese reform policy and underlying GDP-growth conditions could give a sounder input for decision-making by domestic, European and global investors, Swedish and German companies included. The ambition of the paper is to contribute to a move from too much short-term to more medium- and long-term analysis of China’s development – an approach that should be promising also from a European corporate perspective.

JEL:   E60, F23, F 60, O53, P21, P48.

Read the full article here,
China’s Strive for Quality of Growth and Growth Data.pdf

Hubert Fromlet
Senior Professor of International Economics, Linnaeus University
Editorial board

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